UAE Chemical Maker Eyes Expansion Even as Merger Talks Continue

(Bloomberg) -- The United Arab Emirates’s biggest chemicals producer Borouge Plc is seeking further expansion opportunities, even as it pursues a €30 billion ($32.8 billion) tie-up with a unit of Austria’s OMV AG.

State-owned Abu Dhabi National Oil Co., which controls Borouge, is pushing for international growth, including a multibillion-dollar pursuit of Germany’s Covestro AG, purchasing stakes in natural gas fields in Egypt and Azerbaijan and talks over a Brazilian chemicals company. Adnoc is also negotiating the proposed merger of Borouge with OMV’s chemical producer Borealis AG. 

Borouge will be Adnoc’s petrochemicals “champion,” Chief Executive Officer Hazeem Sultan Al Suwaidi said in an interview.

“You’ve seen how things are evolving with Adnoc in terms of their expansion and acquisitions and further growth,” the Borouge CEO said. “Petrochemicals will definitely will be big portions of this.”

Borouge has been “evaluating options,” which are likely to embrace the company’s key Asian markets, including India and China, Al Suwaidi said at the construction site of its fourth major production facility. The most important thing is to have the right partner, he added.

Al Suwaidi said he couldn’t comment on the talks between Adnoc and OMV on the Borouge-Borealis merger.

The Borouge 4 project, at the Ruwais industrial area along the coast from Abu Dhabi city, is set to be completed by the end of 2025 and boost the company’s production capacity to 6.4 million tons a year from 5 million now. It exports plastics from the site, which is also the location for Adnoc’s main refinery.

Chemical markets are set to remain under pressure this year, after prices declined in 2023, Al Suwaidi said. Borouge pledged to maintain its 2024 dividend payout at $1.3 billion and will rely on geographically diverse customer base to support sales, he said.

“We are navigating through year 2024 very cautiously,” the CEO said. “It’ll be also another challenging year.” 

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